By Karen McCarthy, NASFAA Policy & Federal Relations Staff

The Department of Education (ED) will be implementing changes to correct two glitches with IRS flags in late January, it announced in an Electronic Announcement released Tuesday. However, they will not be reprocessing affected 2018-19 FAFSA applications that were processed before the corrections are implemented, so workarounds will be necessary.

The first issue occurs when schools receive conflicting IRS flags. Schools have reported receiving applicant transactions that have an IRS Request Flag of 02 (IRS data for the [student/parent] was transferred from the IRS and was not changed by the user prior to submission of an application or correction) and an IRS Data Field Flag of 2 (IRS data was transferred and changed by user to a different value) for the student or parent Tax Return Filing Status field. As a workaround, schools may accept an IRS Request Flag of 02 when the only IRS Data Field Flag equal to ‘2’ is the Tax Return Filing Status field. This allows FAAs to continue to consider these transactions as verified should the application be selected for verification.

The second issue is more complex. Schools have identified instances in which 2018-19 transactions include an IRS Data Retrieval Tool (DRT) Request Flag of 06, indicating that the student or parent is ineligible to use the IRS DRT, even though the information on the transaction would suggest otherwise. In these instances, fafsa.gov is preventing applicants from using the IRS DRT when making corrections on these specific transactions.

Applicants also may experience issues with navigation or submitting corrections on fafsa.gov if they attempt to correct student or parent financial fields on impacted transactions. Additionally, the IRS Data Field Flag values are not updating correctly for student or parent financial fields on these affected transactions. These problems arise only when the student/parent takes five specific actions, outlined in the Electronic Announcement, when completing the FAFSA.

Until the correction is in place in late January, affected applicants or parents who need to make corrections or wish to use the IRS DRT should do so to an earlier transaction that does not have the student or parent IRS Request Flag of 06. When making corrections to the earlier transaction, applicants and parents should avoid correcting any field that would make them eligible to use the IRS DRT, including but not limited to Tax Return Filing Status, Parents’ Marital Status or Student’s Marital Status Date. If other corrections had been made to subsequent transactions, those corrections should be reapplied to this earlier transaction. This will allow the correct IRS Request Flag to properly carry forward to the new transaction.

Given that the workaround for the second issue is complicated and burdensome for applicants and for schools, NASFAA has asked ED for more details on the numbers of affected applications and the rationale for the decision not to re-process affected applications.

Publication Date: 1/18/2018

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